Dithering ministers have no credible policy for delivering net zero goal
More money for defence, policing, childcare, long-term illness, new nuclear, gigafactories, an auto industry struggling to find reasons to stay in the UK now that the internal combustion engine is to be assigned to the dustbin of history – the list of calls on the public purse just keeps on growing.
Jeremy Hunt, the Chancellor, will no doubt make as much of a show as he can out of the little room for manoeuvre that he’s got in this week’s Budget.
But the overriding message will be similar to that of Liam Byrne, one-time chief secretary to the Treasury, who on being voted out of office in 2010 left a note on his desk to his successor saying: “I’m afraid there is no money. Good luck.”
Gordon Brown had spent it all; Byrne’s missive marked the start of years of penny-pinching austerity. On this occasion, Hunt has no one to blame for the dire state of the public finances but his own Government, which has even more heroically splashed the cash, first on lockdown and then on energy price subsidies. Office for Budget Responsibility forecasts suggest there is little or no money left for all those other worthy causes.
Into this miserable straitjacket of constraint steps – like a forgotten relative at the nation’s own funeral – another of the Government’s claimed objectives, net zero by 2050.
This is a legally binding commitment, and should therefore be at the heart of whatever industrial/ energy strategy the Government might have, yet it doesn’t even figure on Rishi Sunak’s five key priorities for 2023.
While others race ahead, climate change policy in Britain has been left becalmed amid a sea of Whitehall indecision, byzantine planning restrictions and lack of money.
It is as plain as a pike staff that net zero by 2050 is already an almost wholly unrealistic objective, but the pretence goes on, apparently oblivious to the scale of the challenge.
More than 90pc of the country’s current energy provision – gas, coal, oil, diesel and petrol – is not meant to exist in 27 years. The idea that alternatives can be achieved in such a short space of time is cloud cuckoo land.
Even to come close requires the Government to start putting its hand in its pocket in a manner not yet remotely contemplated.
Instead, ministers hide behind a list of headline grabbing targets, aspirations and notional commitments that they fondly hope will of themselves galvanise the private sector into investing and bringing about the desired transition.
Well, here’s the truth: they will not. I’ve been talking to the climate change activist Daragh Coleman, whose CBI projects consultancy has been crunching some of the numbers, using data from Imperial College London.
By his calculation, removing all hydrocarbon-based sources of energy from the economy by 2050 would result by way of replacement in a 400pc increase in peak demand for electricity from the UK’s 20m-plus households. On average, electricity usage would surge from 12.8 kW/hours a day per household to 126.8. Business demand would grow by a similar order of magnitude.
Given current dithering and Treasury scrimping, how on earth is that going to be achieved?
Even with advances in energy storage and efficiency, it’s going to require something like a fivefold expansion in both the National Grid’s and the country’s generating capacity.
And by the way, National Grid does not disagree. It has stated that over the next seven years it will need to install five times the amount of transmission infrastructure in England and Wales that has been built in the past 30 years to support the Government’s target of 50GW of offshore wind by 2030.
For its part, the Climate Change Committee (CCC) said in an update last week that a decarbonised electricity system alone will require reinforcement of all parts of the existing network, with an average doubling of their capability by 2035.
As it is, the CCC is almost certainly underestimating the scale of the task, having factored in only a 50pc increase in demand for electricity to reflect the expected increase in electricity use in transport, industry, and buildings.
National Grid already struggles to keep the lights on during even the briefest of wintry spells. What chance when there is no gas, no oil, no coal and the country’s entire transport, lighting, heating and air-conditioning needs are dependent on electricity?
The only new nuclear build going on in Britain right now is the ruinously expensive Hinkley Point C, and all this will do is partially fill the gap in supply left by the progressive closure over the next five years of the ageing remnants of Britain’s existing fleet of nuclear generators.
The “Great British Nuclear” initiative is as things stand no more than a list of aspirations.
Be that as it may, the energy revolution is coming. Already, there is unstoppable global momentum. The UK can either be at the forefront of it, or left trailing at the back, ever more dependent on foreign technology, expertise and overseas supply chains in its efforts to catch up.
The extra £1bn a year earmarked in this week’s Budget for carbon capture is a step in the right direction, but still falls woefully short of what’s needed for the wider energy transition.
Yes, the Government has a policy of sorts, but without money behind it to help with implementation, it is worthless. The private sector won’t invest on the back of targets alone. Take the car industry. The Government says that sales of new petrol and diesel cars will be banned from 2030 onwards.
A noble aim perhaps, but not one likely to be helpful to car production in Britain. If told that all existing plants are to be made obsolete by 2030, the world is your oyster when deciding where to locate new electric vehicle (EV) manufacturing capacity. The way things are going, it won’t be Britain. There is a real prospect of the target costing jobs rather than creating them.
CBI’s Coleman reckons that the Government needs to be allocating a sum equivalent to at least 1pc of GDP to the energy transition to stand some chance of success – about £26bn a year – an investment that he believes will pay for itself several times over in higher growth.
But if money is tight, and there are all those other calls on the public purse, where’s it going to come from? Part of the answer may lie in smarter allocation of resources. Why not, for instance, hypothecate some of the defence budget to these goals, by mandating that all military procurement be hydrogen-powered vehicles, or even, if the Government felt minded to follow the protectionist model of America’s Inflation Reduction Act, are made-in-Britain EVs.
Net zero by 2050 may be fantasy, but we fail to participate in the industrial revolution of the coming energy transition at our peril.
‘The idea that alternatives can be achieved in such a short space of time is cloud cuckoo land’